Four Pitch Deck Pitfalls To Avoid When Pitching Investors
Fundraising can sometimes feel like a black box. Which investors should I target to invest in my company? How do I get their attention? What type of information do they need from me?
A pitch deck is one of the most effective mediums to reach investors and communicate your brand message. A successful pitch deck not only presents your business, but also engages investors in a way that convinces them to close the deal. With representatives who have sat on both the buy and sell sides of the investment table, Indie Beauty Media Group has the luxury of perspective when it comes to what investors look for in a pitch deck and how a successful pitch is executed.
We also know, thanks to reader feedback and the overflow attendance at our BeautyX Capital Summit course on pitching investors, that there is strong interest among brand founders in specifics about preparing the right investment presentation materials. The best place to start is to learn from the most common mistakes we see brands make. Here are common pitch deck ‘pitchfalls’ to avoid.
Assuming One Size Pitch Deck Fits All
Spoiler alert: You should be leveraging more than one pitch deck during the capital-raising process. Just as you would personalize your message to different consumers of your brand’s products or services, you should tailor your pitch to appeal to the unique goals of your various potential investors. At the end of the day, they, too, are customers—customers of your business model.
The level of data you disclose should be a carefully considered factor in building your roster of pitch decks.
In practice, this approach means that before you ever step into a meeting, you should have an informed view of a firm’s background and investment mandate; the investment experience and working style of the professionals you’ll be meeting with; and any other idiosyncrasies of that investor. At the heart of your research, your goal is to understand the nature and scale of the investor’s motivation to invest in your market, and the level of expertise with which they will do it.
For example, if an investor is highly motivated to invest in the beauty space, but doesn’t have a historical track record of doing so, you may need to tailor the conversation around the details of how your product and industry operate. Contrarily, if an investor has a high degree of expertise in the beauty space, but fails to see the value in investing in beauty right now, then your time is better spent educating them about the market opportunity rather than the mechanics of the product or industry.
The level of data you disclose should be another consideration in building your roster of pitch decks. For a preliminary meeting, a non-confidential deck may be sufficient for grabbing the investor’s attention and generating interest in learning more about your business. However, once you’ve gone down the due diligence path with an investor, a confidential deck that covers all of the information they need to make their decision is more appropriate.
A persuasive argument is not about what you know; it’s about what you can prove to others.
Failing to Connect the Dots
There is a slew of free resources available to entrepreneurs on what information to include in a pitch deck. A simple Google search leads to a fairly well-defined list. Most importantly, you need to be able to tie all of these points together to create a sum greater than the individual parts.
Ultimately, a persuasive argument is not about what you know, it’s about what you can prove to others. Use the facts of your business to tell a compelling story. Make the decision to invest in your business a no-brainer for investors, a natural next step to a series of obvious assumptions. Lead prospective investors to that conclusion by building the irrefutable evidence to support each assumption along the way. For example, if Beauty Independent sought investment, we’d need potential investors to accept several assumptions, including assumptions about the growth of the beauty market, the increasing demand for artisanal products by independent beauty brands, and the lack of existing support, including press coverage, for independent beauty entrepreneurs.
Boring (or Scaring) The Investor
If you’ve lived to tell the story of a full day of interviewing potential new employees, you know how tiring meeting with potential candidates one after the other can become. You can also attest to how readily canned interview answers can blur the lines between candidates. Like a recruiter searching for the right hire, an investor hears hundreds of pitches before deciding one is worth a follow-up. The best way to ensure your pitch is that one in a 100 is to separate it from the white noise. Make your presentation memorable by the way that you dress. Engage investors with a sample of your product and tell your brand story. Be creative and share your passion, but avoid gimmicks and be careful not to lose your credibility in the process.
Fueled by passion, your job is to pour your life into building your brand and serve as a never-ending source of optimism to champion your brand story. An investor’s job, in turn, is to play devil’s advocate and identify the holes in your story. It might feel personal sometimes, but it’s not. Investors need to understand the risk profile of what they’re taking on.
Every story will have holes. Their existence is not a deal breaker. Rather, the inability to anticipate them, analyze them intelligently, and offer a plan to mediate for them can be. Show your investors you are conscious and alert to your blind spots.
Of course, at the end of the day, it will be your experience, the quality of your team, and the value proposition of your product that ultimately dictates how much demand you’ll get from investors. However, avoiding these four common traps will enable you to communicate the critical factors effectively.